Luxury brands like Maserati, Ducati plan a comeback trail to India with new strategies

Several international luxury brands are making a return to India with reworked strategies, after failing to make a mark in this high potential market in their first outings.Vijaya Rathore | ET Bureau | August 11, 2015, 07:54 IST

Several international luxury brands are making a return to India with reworked strategies, after failing to make a mark in this high potential market in their first outings.NEW DELHI: Several international luxury brands, including carmaker Maserati and lingerie label La Perla, are making a return to India with reworked strategies, new partners and more realistic expectations after failing to make a mark in this high potential market in their first outings.

While La Perla and Maserati have tied up new partners here, Italian superbike maker Ducati has set up a subsidiary.

According to industry insiders, British luxury menswear and accessories brand Alfred Dunhill, which brought the shutters down on its stores in India in 2012, is busy making a comeback strategy. Italian fashion house Versace, too, according to sources, has found a new partner in place of Infinite Luxury just two years after tying up with designer Manav Gangwani's firm.

These brands are looking to tweak their product, pricing and distribution strategies to suit the local market and set realistic goals in a nascent market that lacks good infrastructure for luxury marketing. And they all know the importance of a good local partner. "The local partner failed to offer after sales services. We had to fly our technicians from Italy to handle individual customer issues," said Umberto Cini, managing director for Middle East, India and Africa markets at Maserati, which had troubled first stint in the country in 2008 when it barely sold 20 cars in two years. The Italian carmaker has now made a comeback with three distributors.Cini said the earlier partnership caused a lot of damage to the brand's credibility here and that the mistakes will not be repeated this time.

La Perla is re-entering the Indian market with a new partner — Vikas Jain, co-founder of phone maker Micromax, who believes that to succeed in India an international brand must craft a business model that takes into account uniqueness of the local market.

"Most brands currently work on a master franchise model in India. Rules of the game have to change if one has to make serious money here," he said. "My plan is not to open a couple of stores, invest a few crores and make a few lakhs of profit. There is to be strategic level of investments and more serious commitment from both parties for a long term," Jain said.

The luxury lingerie brand first entered India in 2006 through an exclusive franchise partnership with the Murjani Group, one of the early entrants in the luxury trade in the country. But the partnership fell through.

Experts say many luxury brands got carried away in their first stint considering the growing number of affluent consumers and set unrealistic targets. "India's luxury market is very shallow at the moment and brands cannot expect to play the volume game right now," said Santosh Desai, a brand consultant and social commentator. Ducati, which had a tough ride with local importer Precision Motors, has set up a wholly owned Indian subsidiary, Ducati India, to have a better control in the market and appoint dealerships directly. It's not looking to scale up too fast. "We have not come to India to make volumes, but to build the brand. We are expanding dealership network to new cities like Bangalore and Pune this year," said Pierfrancesco Scalzo, general manager for sales and marketing at Ducati Asia.

Alfred Dunhill, too, is looking to draft out a better business plan for India after its retail tieup with S Kumars group firm Brand House Retail broke up in 2012, according to people aware of the development. German luxury writing instruments maker Montblanc is also developing a retail and distribution plan with its joint venture partner Titan, sources said.

Experts say luxury brands need to invest money in growing the market for luxury consumption. "They have to ask tough questions to themselves (including) are they ready for a second stint," said Desai.

ET View: Better Homework This Time

Brands are sensitive to contamination. Luxury brands especially so. When the first flight of international luxury brands landed in India, they tied up with local partners they believed could push not only their products, but also their brand value. The experience was bitter. With a customer base that prefers to make purchases when visiting the 'home countries' of these high-end products, these names found their brands being automatically diluted by 'coming to an outlet near you'. For international luxury brands to work a second time round, paying more attention to local parameters - location, ambience, customer experience etc -- is paramount. Which means doing proper homework about how rich Indians think and buy things in India.